Filing income tax returns: Here’s how to avoid being labelled a tax evader

Filing income tax returns: Here’s how to avoid being labelled a tax evader

The income-tax department on Wednesday warned salaried-class taxpayers against using illegal means while filing their returns, stating that violators would be prosecuted

Filing income-tax returns (ITRs)? Take note: Those who furnish incorrect information while filing ITRs will be reported to their employers and punished under the law, the Income Tax Department on Wednesday warned salaried-class taxpayers. The I-T department’s Central Processing Centre (CPC), which receives and processes ITRs, in Bengaluru, has issued a “cautionary advisory” warning taxpayers that they should not “fall prey” to tax advisors or planners who help them prepare wrong claims to get tax benefits.

The I-T department’s warning comes after its investigation wing in January unearthed a racket by employees of information technology companies based out of Bengaluru who werre allegedly helped by a tax advisor to get fraudulent tax refunds. Do you think this is a small matter? Think again. The Central Bureau of Investigation (CBI) recently registered a criminal case to probe this nexus.

The latest ITR-1 form, largely used by the salaried class of taxpayers, has been activated on the official e-filing portal of the income-tax department.

Here are the top 10 things that you need to know before filing your income-tax returns:

1) Don’t give wrong info in your ITRs: The Income Tax Department on Wednesday warned salaried-class taxpayers against using illegal means while filing their returns, stating that violators will be prosecuted and their employers will be intimated to take action against them.

2) No under-reporting of income or inflated claims: What ‘illegal means’ is the I-T department referring to? The warning refers to under-reporting of income or “inflating” of deductions.

Calling it a “cautionary advisory” on reports of tax evasion by under-reporting of income or inflating deductions or exemptions by salaried taxpayers, the I-T department said such attempts “aided and abetted by unscrupulous intermediaries have been noted with concern”.

3) Wrong claims to be seen as tax evasion: What action will the I-T department take if it detects such wrong information in your ITR? The taxman has warned that wrong claims will be treated as cases of tax evasion. Such offences are punishable under various penal and prosecution provisions of the Income Tax Act, it said.

The one-page advisory added that if the department notices any fraudulent claims in the ITRs, such claims “may be punishable under provisions of the IT Act and this may also delay issuance of their refunds”.

“Taxpayers, are, therefore strictly advised not to fall prey to false promises or mis-advice by unscrupulous intermediaries and submit wrong claims in their ITRs, which would be treated as cases of tax evasion,” said the advisory.

4) This advisory applies to government employees as well: In case government or public sector undertaking employees make wrong claims and are caught, the I-T department will inform the vigilance division of their place of employment. Subsequently. the vigilance division will take action under conduct rules.

5) Extensive risk analysis system to catch wrongdoers: How will the taxman catch you if you file wrong information in your ITR? The advisory added that the I-T department possesses an “extensive risk analysis system”. This is an automated system that has no human interface. It identifies persons who are non-compliant and aim to subvert the trust based-system “envisioned” while processing of ITRs at the CPC. “In all such cases of high risk, the department may examine and verify the details submitted by taxpayers in their ITR subsequent to the processing of returns,” it said.

6) Tax advisors and planners can be punished, too: The I-T department also asked tax planners and advisors to “confine their advice to taxpayers within the four corners of the IT Act” and warned that the violators will be prosecuted and such instances will also be referred to enforcement agencies like the CBI and the Enforcement Directorate (ED) for criminal prosecution.

7) ITR-1 forms available now: The latest ITR-1 form that is largely used by the salaried-class of taxpayers is now available on the official e-filing portal of the Income Tax Department. The single ITR form, notified by the Central Board of Direct Taxes (CBDT) on April 5, has been put on its website, https://www.incometaxindiaefiling.gov.in, on Monday.

8) Now, provide break-up of salary in your ITR: The new ITR forms for the assessment year 2018-19 ask salaried class assessees to provide their salary breakup, and businessmen their GST number and turnover.

The most basic, ITR-1 or Sahaj, to be filled by the salaried class of taxpayers, was used by 30 million taxpayers during the last financial year.

The form this time seeks an assessees salary details in separate fields and in a breakup format such as allowances that are not exempted, value of perquisites, profit in lieu of salary and deductions claimed under section 16.

These details are provided in Form 16 of a salaried employee and a senior tax official said that these are now meant to be mentioned in the ITR for clarity of deductions.

The CBDT had said that the ITR-1 can be filed by an individual who “is resident other than not ordinarily resident and having an income of up to Rs 5 million.

9) No change in method of filing ITRs: The CBDT had said some fields have been “rationalised” in the latest forms and that there is no change in the manner of filing the ITRs as compared to the last year.

“Further, the parts relating to salary and house property have been rationalised and furnishing of basic details of salary (as available in Form 16) and income from house property have been mandated,” it had said.

10)Last date for filing ITRs: The last date for filing the ITR is July 31.